How to avail the best educational loan in India? Top 10 Education Loans in India

How to avail the best educational loan in India? Top 10 Education Loans in India

Educational loans are offered to students for pursuing their higher studies both in India as well as abroad. They are offered for both graduate and post graduate studies. Loans are offered for vocational courses as well. Loans generally cover expenses such as course fee, books, hostel fees and living expenses. Both public sector as well as private sector banks offer educational loans. Banks like SBI, Bank of Baroda, Axis bank, Central Bank of India, IDBI etc offer education loans for students. Generally, no collateral security is needed for loans up to a certain limit. In most banks, there is no collateral security for loans up to Rs 4 lakh, while third party guarantee is needed for loans up to Rs 7.50 lakh. For loans above Rs 7.50 lakh, a security equivalent to the loan is required.

1. If you are studying within India, it’s better to apply for a loan at the place of study than at the place where you reside. You will have better access to funds

2. Make sure that the repayment starts only after 6 to 12 months after getting a job. This way, you can pay from your own salary without burdening your parents.

3. Banks generally prefer to provide loans for students who choose traditional courses. They also prefer to finance long term programs by reputed institutions. Banks will be cautious before sanctioning loans for courses where employment prospects are less.

4. For loans up to Rs 4 lakhs, the borrower need not put any amount. The lender will sanction the entire amount. For loans exceeding Rs 4 lakhs, the borrower may need to bring a loan margin amount of around 5% to 15%.

5. Have all necessary documents like age and address proof, attested mark sheets, income proof and documents issued by the admitting institution like prospectus, fee breakup etc. In case of abroad studies, obtain admission letter and I-20 form from the foreign institution

6. Compare education loans from various banks and shortlist the best before choosing the final one.

Interest Subsidy: Government provides ascheme called Central scheme to provide interest subsidy (CSIS) for students from economically weaker sections (EWS) to pursue technical/professional courses in India. Under this scheme, full interest subsidy is provided for the entire period of moratorium i.e, course period + 6 months or 1 year after getting job.

Additional charges: Banks don’t charge processing fee when providing educational loans. Banks may levy prepayment charges. Some banks may levy a prepayment penalty of up to 4% while some banks don’t levy prepayment charges at all. Banks may levy other charges like administration fees and documentation fees.